Tuesday, 23 November 2021

Market Summary

Market Summary 23 November 2021

Bitcoin Price: $56,247.18 (-4.05%)
Ethereum Price: $4,085.97 (-4.05%)


ENS Registrations Jump, L2 Traction Diverges, & Uniswap Fee Tiers

  • ENS registrations this month did laps over average monthly registrations since 2019. Whether this is a side effect of the ENS token launch or not is unclear, but the project sure does seem a lot more popular after giving users a fair bit of free tokens.
  • Arbitrum has seen a steep slowdown ever since the initial mania on the network. The rollup’s consumption of Ethereum gas to settle transactions has gone down dramatically since mid-September.
  • Apps on Arbitrum are likely waiting for Arbitrum Nitro before bombarding the network with incentives. Currently, Arbitrum has a gas cap that limits the ability of protocols like MCDEX to run full-scale deployments. Once that hurdle is cleared, the sky is the limit.
  • However, not all rollups are experiencing a downtrend in traction; we’re seeing ZK Sync’s usage, for example, pick up in recent weeks. Between Curve’s deployment on the rollup and OKEx announcing withdrawal/deposit support on ZK Sync, the future of the network looks bright.
  • It’s been just over six months since Uniswap v3 hit Ethereum mainnet, and if concentrated liquidity didn’t excite you as a trader, then lower fee tiers surely have. Close to 65% of Uniswap’s weekly volume was on the back of 0.05% fee pools, followed by the regular old 0.30% fee pool.
  • Notably, the 0.01% fee tier, which launched just over a week ago, accounted for just under 7% of weekly volume. As we noted last week, this could be the start of a fee war amongst the top DEXes.
  • We’re starting to see the world of global macro heat up heading into year-end and once again find ourselves coming back to the most important macro variable right now—the U.S. dollar—which has strengthened considerably in recent weeks. With growing expectations for tighter monetary policy and an acceleration in U.S. economic data, the dollar appears to be well-positioned against other major currencies.


Here’s how El Salvador’s president plans to use bitcoin bonds

  • El Salvador’s president, Nayib Bukele, is planning to use a so-called bitcoin bond to fund a new municipality called “Bitcoin City,” which would be powered with geothermal energy from a volcano. 
  • The president said the bonds will be used to fund a “Bitcoin City,” which will be located near a volcano that will provide the municipality’s operations as well as bitcoin mining. Bukele said the bonds will be available in 2022. He estimates the city’s public infrastructure would total about 300,000 BTC (worth about $16.8 billion at the time of writing). 
  • Bukele said that the proposed city, which would have its own mayor, would not charge residents or businesses income tax, capital gain taxes, property tax or payroll tax. Instead, it would levy a 10% value-added tax on purchases to pay for city upkeep. Half of the proceeds from that tax would go toward supporting standard city services, like trash collection and maintaining parks. The rest would go toward paying for the bonds the government is issuing to build the city, he said.


WEF releases resource suite for CBDCs and stablecoins aimed at regulators and businesses leaders

  • On Friday, the WEF announced its Digital Currency Governance Consortium White Paper Series, a resource suite created by 85 organizations from 40 countries around the world. The publication contains eight separate white papers exploring topics such as the impact of lawmakers regulating stablecoins and central bank digital currencies, or CBDCs, as well as informing readers about their risks, benefits and alternatives. In addition, the suite addresses regulatory gaps for digital assets and their potential uses in further financial inclusion and cross-border aid.


Institutional managers bought the dip as crypto funds see $154M in weekly inflows

  • Institutional investors were unfazed by the recent correction in the cryptocurrency markets, as digital asset funds dedicated to Bitcoin (BTC) and Ether (ETH) continued to grow, according to data from CoinShares. 
  • Crypto investment products, which include exchange-traded funds (ETFs), saw weekly inflows totaling $154 million for the week ending Nov. 20, according to CoinShares’ latest fund flows report. Like in previous weeks, Bitcoin investment products attracted most of the inflows at $114.4 million. Funds devoted to Ether saw weekly inflows of $12.6 million and multi-asset products registered $14.1 million in net investments.
  • Year-to-date, institutional investors have allocated over $6.6 billion to Bitcoin products, $1.17 billion to Ether products and more than $9.2 billion to crypto as a whole.


Theta v3.2.0 code open sourced on Theta GitHub, with upgrade scheduled to go into effect at block height 13123789 (~5pm PT Dec 4):

  • Theta v3.2.0 code has now been open sourced on Theta GitHub, with the upgrade scheduled to go into effect at block height 13123789 (~5pm PT Dec 4):
  • https://github.com/thetatoken/theta-protocol-ledger/releases/tag/v3.2.0 
  • Upgrades include:
    • EVM enhancements in preparation to enable THETA token support in smart contract
    • Theta RPC functionality and efficiency improvements, in particular to support block range queries


Status check: Ethereum in full deflation mode as Eth2 merge gets closer

  • The Ethereum community has been hard at work over the past few years, laying the foundation for its shift away from its current proof-of-work (PoW) algorithm which has formed the backbone of the blockchain’s operation up until today.
  • Ethereum’s switch to its proof-of-stake- (PoS-) powered Ethereum 2.0 chain is edging closer to reality, with recent updates to its blockchain resulting in the issuance of Ether (ETH) becoming deflationary.
  • Recent upgrades have resulted in deflationary issuance of ETH, where the burning of a portion of transaction fees has surpassed the issuance of new ETH through mining. Some in the industry didn’t expect this to happen before the network upgrades to Ethereum 2 (Eth2). It’s an important factor that is envisaged to drive the value of the underlying cryptocurrency upward in the months and years to come.


President Biden picks Jerome Powell to be next Fed chair

  • President Joe Biden has tapped Jerome Powell to serve another four-year term as the chair of the Federal Reserve System’s Board of Governors.


Australian Senator says DeFi is ‘not going away any time soon’

  • Senator Jane Hume has stated that decentralized finance (DeFi) “presents huge opportunities” for Australia to cement its place as a “front-runner for innovation and economic progress.”
  • Senator Hume spoke at the Australian Financial Review Super & Wealth Summit in Sydney on Monday, Nov. 22. She is the Australian minister for Women’s Economic Security, representing the state of Victoria as a member of the Liberal Party.  The conference was primarily about super and government retirement funds — both notoriously slow and steady investments. The comments on DeFi are more notable in this regard.
  • Senator Hume called for industry and government to acknowledge that DeFi is “not a fad,” and to “tread cautiously, but not fearfully” because the technology is “not going away any time soon.”
  • “If the last 20 or 30 years have taught us anything, it’s that all innovation begins as disruption and ends as a household name,” she said.

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